It's simply where the most opportunities are. The idea is to move there and live uncomfortably until you network your way to an awesome, high paying job.
Alternatively, the tech companies there usually do more interesting stuff than in other area. Here in NYC most are related to advertising or media—stuff not easy to get exited about. San Francisco has its large share of silly ideas for companies, but it also has many that do interesting stuff.
Also I don't find jobs / people in the state the most accurate indicator. To someone living in LA, moving to SF might as well be moving to Utah. The open positions / qualified people is the far more useful metric, and SF will still beat all of them on that.
I could easily live somewhere cheap and commute for a few years then build up enough to move somewhere nicer.
What irritates me the most is there is absolutely no physical reason why London has to be the place for start ups in the UK and a whole bunch of reasons why it's not a good place.
Where I live now rent and house prices are incredibly cheap (even compared to most parts of the UK), the city is rolling out excellent fibre (I have 150Mbps at home and 100Mbps at work) and transport links are excellent, it would be a good place to start a software company (I am doing) but hiring is going to be hard since it will require relocation to get the talent needed (or working entirely remote, something I'm considering).
I am in security (but it's similar in many specialties) and while there are very good companies in Austin if I want to to rise become a security architect or director of information security I have to go to the tech headquarters. Companies like Google and facebook may have regional offices but the core innovative security/ai/pl work and executive decision making is being done in the home campuses.
That being said, I would never leave Austin for the SF bay unless it involved a $350k+ salary.
San Diego, for example, stomps all over Austin in terms of software jobs, and Austin's hardware scene is laughable.
Big ones: BAE, Northrop Grumman, and General Dynamics. (Previously I would have listed Qualcomm ...)
A zillion biotech startups: I drive past at least a dozen near here every day: https://www.google.com/maps/@32.9104712,-117.2304182,18.57z
Rockstar San Diego seems to be hiring as far as I can tell.
In addition, a lot of manufacturing companies up in the San Marcos/Vista area all need automation programmers.
If you're not finding SD companies with software jobs, I'm very surprised.
Well, he didn't choose to live in San Francisco for long. By the end of his four years there, he decamped to Seattle, which seems to be the natural progression these days: live in SF and close a few deals in a tiny space, then move to Seattle into a slightly larger place and be amazed at all of the room you have.
Even if I lived in SF I'd be reluctant to commute an hour to work if I could just as well work from home.
The same pitfalls that apply to outsourcing to low-cost-of-living countries should apply to hiring American remote workers: communication overhead, lack of context and understanding of what the product should be, etc. If a projects works well with remote workers in developed countries, consider that it's probably irrational and a borderline violation of fiduciary duty to pay extra for them rather than equally skilled workers in India/China/Eastern Europe.
Most people who work in a multi storey office communicate the same way with the people on a different storey as they would with people in a different city.
You could look at the growing number of layoffs at post-seed stage companies[1].
Or you could look at startups that voluntarily publish financial information. Take, for example, this one[2], which, as of June, was spending $525,000/month on payroll (equating to an all-in cost of $146,000/year per employee) when it had less than $300,000 of monthly bookings revenue.
A lot (perhaps the majority) of venture-backed Bay Area startups are entirely dependent on investor money to sustain their workforces at their current sizes. Even some of the tech companies in the area that have gone public aren't profitable. FireEye and Marketo are two that come to mind.
Everybody has been trading profitability for growth, and that's a game most will eventually lose.
For tech companies, it doesn't really matter. They have unlimited money (relative to the cost of an employee). For startups, it does.
2. Many people in the Bay Area are employed by angel and venture-backed startups, so how does it make sense to ignore them? If and when there's a significant downturn that results in the unsustainable startup herd being culled, not all startup employees are going to find six-figure replacement jobs at companies like Google and Facebook. People who lived through the first .com bust know how fast the job market can dry up for a large subset of employees.
3. It is absolutely not true that the Bay Area's unprofitable publicly-traded tech companies have "unlimited money" relative to anything. Review their SEC filings and you can determine how much money they have down to the dollar. You should not be surprised when those that struggle to reach profitability sooner or later take cost-cutting action, which may include layoffs and adjustments to employee compensation. Twitter just did this. Even profitable tech companies, like IBM and HP, have laid off significant numbers of employees. Bottom line: when push comes to shove and the shit hits the fan, companies tend to use large knives, not scalpels.
> And don’t forget about the importance of compound interest. I will remind you that $2k per month saved on rent for one year is $24k. Invested for 50 years averaging 6% interest comes to roughly $450k. Freedom. HTFU.
$450K towards retirement for one year of living in cramped, expensive SF sounds like it could be a reasonable payoff for many people.
It definitely costs my startup employer (and myself), especially factoring in preschool. It also steals a job and "juice" from the local economy - we'd have already hired a nanny if rents were merely 2x a normal city, and we'd happily spend more buying from local craftspeople. The money goes into my landlord's retirement account basically doing nothing.
Is your landlord's retirement account a sack under his bed? If not, that money is being invested in publicly traded companies or in bonds to fund public works. It is creating jobs, just not in your neighborhood.
They can afford to live anywhere they want and start their company near their homes.
And yet, clearly, plenty of people do choose to live in San Francisco.